"SIMPLE" Retirement Plans

The Small Business Job Protection Act of 1996 created an entirely new type of retirement plan called "SIMPLE," an acronym which stands for "Savings Incentive Match Plan for Employees." It is available for any business which:

• Has 100 or fewer employees.
• Does not maintain another tax-qualified retirement plan.
• Can be either an incorporated or unincorporated business.

How does it work:

• Employer may choose between a 1% to 3% mandatory contributions
• Employee has the option of taking cash, or having it contributed to a special IRA
• Employees may also elect to defer up to $10,500 of compensation into the plan ($12,500 if age 50+).

Advantages for the employer:

• Employer contributions are tax-deductible to the business
• Deferral limits may be greater for owners and other highly paid employees
• No administrative fees for establishing or maintaining a plan
• No annual IRS form filling required
• Simplicity
• Easy for employees to understand

Advantages for the employee:

• Participants own their own accounts
• No vesting schedule
• Higher maximum contributions limits than regular IRA
• Employer contributions are not taxed currently to the participants
• Earnings grow tax deferred until withdrawn
• Participants have right to direct investment
• Participants can still have a regular IRA, subject to income level and filing status

CLICK HERE TO REQUEST MORE INFORMATION ON SIMPLE-IRAs